GlobeNewswire Inc | Nov 8, 2021 04:02PM EST

November 08, 2021

Growth driven by increased distribution, expanded offerings of original, exclusive, and overall library of content and new user platforms

Affirms 2021 revenue outlook

Board sets $10 million common stock repurchase authorization

COS COB, Conn., Nov. 08, 2021 (GLOBE NEWSWIRE) -- Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) (the Company), one of the largest operators of streaming advertising-supported video-on-demand (AVOD) networks, today announced its financial results for the third quarter ended September 30, 2021.

We delivered a strong quarter that increases our confidence that we can meet our 2021 goals, with record all-time revenue and the second-best Adjusted EBITDA performance in our history, said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. We are seeing momentum in our AVOD networks, highlighted by viewership growth at Crackle in Q3 and strong growth at Popcornflix since our September relaunch. This growth reflects our focus on expanding distribution of our networks and our lineup of original and exclusive content, including additional titles from the recently acquired Sonar assets, as well as our new technology platforms. With the initial launch of our highly anticipated Chicken Soup for the Soul streaming service, as well overall ad impression growth at Crackle Plus, consolidation of our television production activities, Screen Medias growing lineup of acquired films, and our recent international partnership and acquisition activity, we are poised to accelerate execution of our strategy into 2022.

Third Quarter 2021 Financial Summary

-- Net revenue of $29.1 million, compared to $22.1 million in the second quarter of 2021, and $19.4 million in the year-ago period. The 50% year-over-year growth was driven by an increase in ad sales and licensing. Gross revenue for the third quarter was $29.6 million. -- Net loss of $16.7 million compared to a net loss of $11.1 million in the second quarter of 2021, and a net loss of $13.0 million in the year-ago period; $14.5 million net loss before preferred dividends, compared to an $8.8 million net loss in the second quarter 2021 and a $12.0 million net loss in the year-ago period. -- Adjusted EBITDA of $4.9 million compared to $3.2 million in the second quarter 2021, and $4.2 million in the year-ago period. Adjusted EBITDA growth was partially offset by investments in the Companys recently launched technology platforms, marketing and employee compensation.

Recent Business Highlights

-- Launched new free ad-supported streaming service, Chicken Soup for the Soul, which will use the beloved and internationally recognizable megabrand to bring its original mission of Changing Your World One Story at a Time to platforms around the world. -- Announced the formation of the Chicken Soup for the Soul Television Group led by industry leader David Ellender, which consolidates TV production activities and will help capitalize on the global appeal of the brand. -- Made significant progress on international growth strategy with the acquisition of a majority stake in Locomotive Global Inc., a production company based in India, and the signing of an international VOD agreement with Keshet Broadcasting, the largest broadcaster in Israel. -- Increased Popcornflixs viewership by 50% following the re-launch of its AVOD technology platform with a new user experience. -- Grew original and exclusive content to a record 22% of total ad impressions, including the recently integrated Sonar content. -- Sold out of ad inventory for the fourth quarter in a row and continued to drive advertising innovation by integrating ads with high-quality advertising partners.

Common Stock Repurchase Authorization

The Companys Board of Directors today approved a two-year authorization for the repurchase of up to $10 million in Chicken Soup for the Soul Entertainment, Inc. common stock. The Company anticipates that any potential repurchase activity would be conducted opportunistically, in open-market transactions.

Third Quarter Financial Highlights

Gross profit for the quarter ended September 30, 2021, was $6.2 million, or 21% of net revenue, compared to $6.7 million in the second quarter of 2021, or 30% of net revenue, and compared to $4.5 million, or 23% of net revenue for the year-ago period.

Operating loss for the quarter ended September 30, 2021, was $13.2 million compared to an operating loss of $7.8 million in the second quarter 2021, and $11.3 million in the year-ago period.

Net loss was $16.7 million, or $1.04 per share, compared to a net loss of $11.1 million, or $0.79 per share, in the second quarter 2021, and a net loss of $13.0 million, or $1.04 per share in the prior-year period.

Adjusted EBITDA for the quarter ended September 30, 2021, was $4.9 million, compared to $3.2 million in the second quarter 2021, and $4.2 million in the same period last year.

As of September 30, 2021, the company had $66.9 million of cash and cash equivalents compared to $14.7 million as of December 31, 2020, and outstanding debt net of deferred financing costs of $55.2 million as of September 30, 2021, compared to $39.8 million as of December 31, 2020. The company completed a common stock offering in July 2021 that raised gross proceeds of $75.0 million.

For a discussion of the financial measures presented herein which are not calculated or presented in accordance with U.S. generally accepted accounting principles (GAAP), see "Note Regarding Use of Non-GAAP Financial Measures" below and the schedules to this press release for additional information and reconciliations of non-GAAP financial measures.

The company presents non-GAAP measures such as Adjusted EBITDA to assist in an analysis of its business. These non-GAAP measures should not be considered an alternative to GAAP measures as an indicator of the company's operating performance.

Conference Call Information

-- Date, Time:Monday, November 8, 2021,4:30 p.m. ET. -- Toll-free: (833) 832-5128 -- International: (484) 747-6583 -- Conference ID: 4036566 -- A live webcast and replay will be available at https://ir.cssentertainment.com/ under the News & Events tab

Conference Call Replay Information

-- Toll-free: (855) 859-2056 -- International: (404) 537-3406 -- Reference ID: 4036566

About Chicken Soup for the SoulEntertainment, Inc.Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) (the Company) operates streaming video-on-demand networks (VOD). The Company owns Crackle Plus, which owns and operates a variety of ad-supported and subscription-based VOD networks including Crackle, Chicken Soup for the Soul, Popcornflix, Popcornflix Kids, Truli, Pivotshare, Espaolflix and FrightPix. The Company also acquires and distributes video content through its Screen Media subsidiary and produces original video content through the Chicken Soup for the Soul Television Group. Chicken Soup for the Soul Entertainment is a subsidiary of Chicken Soup for the Soul, LLC, which publishes the famous book series and produces super-premium pet food under the Chicken Soup for the Soul brand name.

Note Regarding Use of Non-GAAP Financial MeasuresOur consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). We use a non-GAAP financial measure to evaluate our results of operations and as a supplemental indicator of our operating performance. The non-GAAP financial measure that we use is Adjusted EBITDA. Adjusted EBITDA (as defined below) is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. Due to the significance of non-cash and non-recurring expenses recognized during the three and nine months September 30, 2021 and 2020, and the likelihood of material non-cash, non-recurring, and acquisition related expenses to occur in future periods, we believe that this non-GAAP financial measure enhances the understanding of our historical and current financial results as well as provides investors with measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. Further, we believe that Adjusted EBITDA enables our board of directors and management to analyze and evaluate financial and strategic planning decisions that will directly affect operating decisions and investments. We believe this measure is an important indicator of our operational strength and performance of our business because it provides a link between operational performance and operating income. It is also a primary measure used by management in evaluating companies as potential acquisition targets. We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. We believe it helps improve investors ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates. In addition, we believe this measure is also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our operating performance to other companies in our industry.

The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual, infrequent or non-recurring items or by non-cash items. This non-GAAP financial measure should be considered in addition to, rather than as a substitute for, our actual operating results included in our condensed consolidated financial statements.

We define Adjusted EBITDA as consolidated operating income (loss) adjusted to exclude interest, taxes, depreciation, amortization (including tangible and intangible assets), acquisition-related costs, consulting fees related to acquisitions, dividend payments, non-cash share-based compensation expense, and adjustments for other unusual and infrequent in nature identified charges, including transition related expenses. Adjusted EBITDA is not an earnings measure recognized by U.S. GAAP and does not have a standardized meaning prescribed by GAAP; accordingly, Adjusted EBITDA may not be comparable to similar measures presented by other companies. We believe Adjusted EBITDA to be a meaningful indicator of our performance that management uses and believes provides useful information to investors regarding our financial condition and results of operations. The most comparable GAAP measure is operating income (loss).

A reconciliation of net loss to Adjusted EBITDA is provided in the companys Annual Report on Form 10-K for the year ended December 31, 2020, under Managements Discussion and Analysis of Financial Condition and Results of Operations Reconciliation of Unaudited Historical Results to Adjusted EBITDA.

FORWARD-LOOKING STATEMENTSThis press release includes forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are statements that are not historical facts. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of management and are not predictions of actual performance. Such assumptions involve a number of known and unknown risks and uncertainties, including but not limited to our core strategy, operating income and margin, seasonality, liquidity, including cash flows from operations, available funds, and access to financing sources, free cash flows, revenues, net income, profitability, stock price volatility, future regulatory changes, price changes, the ability of the Companys content offerings to achieve market acceptance, the Companys success in retaining or recruiting officers, key employees, or directors, the ability to protect intellectual property, the ability to complete strategic acquisitions, the ability to manage growth and integrate acquired operations, the ability to pay dividends, regulatory or operational risks, and general market conditions impacting demand for the Companys services. For a more complete description of these and other risks and uncertainties, please refer the Companys Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 31, 2021, and for further information regarding our recent acquisition of the Sonar library and related assets, please see our Current Reports on Form 8-K, as amended, filed with the SEC on May 27, 2021, and July 1, 2021. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. These forward-looking statements speak only as of the date hereof and the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Companys expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

INVESTOR RELATIONS Taylor KrafchikEllipsisCSSE@ellipsisir.com646-776-0886

MEDIA CONTACTKate BarretteRooneyPartners LLCkbarrette@rooneypartners.com(212) 223-0561

Tables Follow

Chicken Soup for the Soul Entertainment, Inc.Condensed Consolidated Balance Sheets

September 30, December31, 2021 2020 (unaudited) ASSETS Cash and cash equivalents $ 66,947,955 $ 14,732,726 Accounts receivable, net 48,265,450 25,996,947 Prepaid expenses and other current assets 2,113,322 1,382,502 Goodwill 41,286,849 21,448,106 Indefinite lived intangible assets 12,163,943 12,163,943 Intangible assets, net 18,976,226 19,370,490 Film library, net 72,850,313 35,239,135 Due from affiliated companies ? 5,648,652 Programming costs and rights, net 15,440,246 15,781,183 Other assets, net 4,876,056 4,517,102 Total assets $ 282,920,360 $ 156,280,786 LIABILITIES AND EQUITY 9.50% Notes due 2025, net of deferredissuance costs of $1,501,768 and $ 31,394,132 $ 31,097,467 $1,798,433, respectivelyNotes payable under revolving credit ? 2,500,000 facilityRevolving loan 17,585,699 ? Film acquisition advance 6,241,534 8,659,136 Accounts payable and accrued other 39,431,948 21,394,957 expensesFilm library acquisition obligations 24,752,229 8,616,562 Programming obligations 1,641,250 4,697,316 Accrued participation costs 22,864,494 12,535,651 Due to affiliated companies 590,383 ? Put option obligation 11,400,000 ? Other liabilities 2,888,964 1,677,906 Total liabilities 158,790,633 91,178,995 Equity Stockholders' Equity: Series A cumulative redeemable perpetualpreferred stock, $.0001 par value,liquidation preference of $25.00 pershare, 10,000,000 shares authorized; 370 210 3,698,318 and 2,098,318 shares issued andoutstanding, respectively; redemptionvalue of $92,457,950 and $52,457,950,respectivelyClass A common stock, $.0001 par value,70,000,000 shares authorized; 8,797,883 881 516 and 5,157,053 shares issued, 8,723,648 and5,082,818 shares outstanding, respectivelyClass B common stock, $.0001 par value,20,000,000 shares authorized; 7,654,506 766 766 shares issued and outstanding,respectivelyAdditional paid-in capital 238,708,111 106,425,548 Deficit (114,056,757 ) (77,247,982 )Class A common stock held in treasury, at (632,729 ) (632,729 )cost (74,235 shares)Total stockholders? equity 124,020,642 28,546,329 Subsidiary convertible preferred stock ? 36,350,000 Noncontrolling interests 109,085 205,462 Total equity 124,129,727 65,101,791 Total liabilities and equity $ 282,920,360 $ 156,280,786

Chicken Soup for the Soul Entertainment, Inc.Condensed Consolidated Statements of Operations(unaudited) Three Months Ended Nine Months Ended September 30, September30, 2021 2020 2021 2020Net revenue $ 29,096,855 $ 19,361,751 $ 74,428,631 $ 46,126,364 Cost of revenue 22,856,374 14,840,851 54,533,027 37,684,786 Gross profit 6,240,481 4,520,900 19,895,604 8,441,578 Operating expenses: Selling, general 15,038,299 9,301,550 35,237,480 23,194,223 and administrativeAmortization and 1,538,650 4,576,742 4,114,355 15,022,885 depreciationManagement and 2,909,686 1,936,175 7,442,863 4,612,636 license feesTotal operating 19,486,635 15,814,467 46,794,698 42,829,744 expensesOperating loss (13,246,154 ) (11,293,567 ) (26,899,094 ) (34,388,166 )Interest expense 1,304,952 659,803 3,533,940 1,322,831 Loss onextinguishment of ? 169,219 ? 169,219 debtAcquisition-related ? ? ? 98,926 costsOther non-operating (101,898 ) (43,445 ) (247,037 ) (4,381,292 )income, netLoss before incometaxes and preferred (14,449,208 ) (12,079,144 ) (30,185,997 ) (31,597,850 )dividendsProvision for 30,000 26,000 59,000 93,000 income taxesNet loss beforenoncontrolling (14,479,208 ) (12,105,144 ) (30,244,997 ) (31,690,850 )interests andpreferred dividendsNet income (loss)attributable to 9,085 (73,135 ) 9,085 (169,878 )noncontrollinginterestsNet lossattributable toChicken Soup for (14,488,293 ) (12,032,009 ) (30,254,082 ) (31,520,972 )the SoulEntertainment, Inc.Less: preferred 2,253,385 1,017,691 6,760,155 2,966,235 dividendsNet loss availableto common $ (16,741,678 ) $ (13,049,700 ) $ (37,014,237 ) $ (34,487,207 )stockholdersNet loss per common share:Basic and diluted $ (1.04 ) $ (1.04 ) $ (2.53 ) $ (2.83 )Weighted-averagecommon shares outstanding:Basic and diluted 16,145,808 12,508,643 14,622,787 12,174,779

Chicken Soup for the Soul Entertainment, Inc.Adjusted EBITDA Three Months Ended September30, 2021 2020Net loss available to common stockholders $ (16,741,678 ) $ (13,049,700 )Preferred dividends 2,253,385 1,017,691 Provision for income taxes 30,000 26,000 Other taxes 62,279 97,466 Interest expense 1,304,952 659,803 Film library and program rights 10,111,885 8,020,638 amortizationShare-based compensation expense 3,474,231 346,773 Acquisition-related costs 554,259 1,538,449 Reserve for bad debt and video returns 1,921,982 4,960,074 Amortization and depreciation (101,898 ) (43,445 )Other non-operating income, net ? 169,219 Transitional expenses 213,813 ? All other nonrecurring costs 1,775,232 472,322 Adjusted EBITDA $ 4,858,442 $ 4,215,290 Nine Months Ended September 30, 2021 2020Net loss available to common stockholders $ (37,014,237 ) $ (34,487,207 )Preferred dividends 6,760,155 2,966,235 Provision for income taxes 59,000 93,000 Other Taxes 250,626 202,117 Interest expense 3,533,940 1,322,831 Film library and program rights 23,881,901 16,922,753 amortizationShare-based compensation expense 3,937,919 820,881 Acquisition-related costs ? 98,926 Reserve for bad debt & video returns 2,156,308 4,072,785 Amortization and depreciation 5,264,353 15,661,774 Other non-operating income, net (247,037 ) (4,381,292 )Loss on extinguishment of debt ? 169,219 Transitional expenses 405,867 4,353,345 All other nonrecurring costs 3,583,130 1,128,662 Adjusted EBITDA $ 12,571,925 $ 8,944,029